Costco drops petrol below $1 a litre in Canberra

Canberra's newest petrol war has taken prices below $1 a litre for the first time in years - but only at two service stations.

Early on Tuesday afternoon, Costco dropped the price of unleaded petrol for its members at Majura Park to 99.7c a litre - 30 cents cheaper than last week's average for Canberra. It prompted Woolworths to go one step further, offering unleaded fuel for 98.7 cents for drivers with a shopping voucher.

Canberra motorists get in for their cheap fuel at Costco Majura Park on Tuesday afternoon. Photo: Jamila Toderas

By 5.30pm on Tuesday, Costco's price had dropped to 97.7 cents.

But the price break was shortlived, by Wednesday morning prices were back above the $1 mark with Costco selling petrol for 104.7 cents per litre at 7.15am and Woolworths dropping its price from 108.7 cents per litre at 7.35am to match its competitor by 8:30am.

By Wednesday morning prices were back above $1 at Woolworths. Photo: Rohan Thomson

According to the latest figures from the Australian Institute of Petroleum, the average price of unleaded fuel in Canberra was 130.6 cents a litre last week. This was a 3.8 cent drop on the previous week, but still almost 20 cents above the Sydney average of 112.3 cents a litre and the Melbourne average of 112.1 cents a litre.

CommSec chief economist Craig James said petrol prices were at their cheapest in more than four years, thanks to falling wholesale prices. However, he warned gross retail margins appeared unsustainably low in Sydney and Melbourne.